Israel's Foreign Minister Avigdor Lieberman attends a party meeting at parliament in Jerusalem in Monday. Lieberman said that he would quit if Israel's attorney-general adopted a police recommendation to indict him on corruption charges.

Mr. Lieberman's legal woes add to the possibility of a shakeup in Prime Minister Benjamin Netanyahu's coalition government, as the parliament paved the way Monday for members of the opposition Kadima party to split with leader Tzipi Livni and join the government.

Lieberman heads the ultranationalist Israel Beiteinu party, which has engendered international controversy for its anti-Arab proposals. He has been the subject of investigation by police for some 13 years, spanning back to the time when he was the chief of staff during Mr. Netanyahu's first term.

The left-wing Haaretz newspaper reported Monday that the latest investigation appears to have gained strength based in part on documents that Lieberman mistakenly left at an office and were then turned over to the attorney general.

Alongside Netanyahu's return as premier this February, Lieberman's political popularity in right-wing circles has surged. His party is now the third-largest in parliament, allowing him to demand the foreign ministry and other key posts as a requirement for his party joining Netanyahu's governing coalition.

Lieberman has portrayed the police as corrupt themselves, and out to get him.

"For 13 years, the police have conducted a campaign of persecution against me," Lieberman said in a statement on Sunday. "As much as my political strength and the strength of Israel Beiteinu rise, the campaign of persecution also intensifies."

In a faction meeting on Monday, Lieberman said he wouldn't do anything differently, and that he expected to clear his name and continue in his position.

"My estimate is that next year and the year after that, I'll remain the party chairman and foreign minister, and most importantly, in the next election, we [will take] it upon ourselves to win over 20 seats," he said. The party won 15 seats in the 120-seat Knesset in February elections this year, up from 11 in 2006.

Kadima faction could join Netanyahu government

The possibility of a shakeup in Netanyahu's coalition was further increased Monday by the passage of a bill that would make it possible for seven members to break off from a political party and join a different faction.

Nicknamed the "Mofaz bill" after Knesset member and former army chief-of-staff Shaul Mofaz, the bill makes it possible for part of the largest opposition party, Kadima, to break away and join Netanyahu's coalition.

That party's leader, former foreign minister Tzipi Livni, had rejected joining Netanyahu's government on the basis that he would not support a two-state solution with the Palestinians. But since Netanyahu stated his openness to that solution in late June, there has been more pressure within Kadima to join the government.

"There was an anticipation when the government was formed that there could eventually be a shakeup because Lieberman might be indicted, or because Netanyahu would agree to a two-state approach," explains Gerald Steinberg, an expert in Israeli politics at Bar-Ilan University, near Tel Aviv.

"This puts pressure on Livni to go back into government, and if she doesn't want to, there's the option of the division of Kadima," he says. "This is not going to be a crisis for Netanyahu. If anything, it creates some opportunities for him and he may get more of the kind of government he wanted in the first place."

Livni decried the Mofaz bill's passage on Monday, and cast it as a sign that Netanyahu – her rival in February's election – is in trouble.

"I understand that the prime minister is worried; for four months, he has been searching for spare parts because he knows Kadima is the only true alternative for the government," she said before the vote, according to the Israeli news source Ynet.